Ligand Enters Medical Device Market With $17.5 M CorMatrix Deal

Ligand Pharmaceuticals Inc. has acquired the economic rights to multiple programs owned by CorMatrix Cardiovascular Inc. Ligand will pay $17.5 million and in return will receive a portion of revenue (synthetic royalty) from CorMatrix’s existing marketed products and will have the right to receive future synthetic royalties from potential future products.

CorMatrix’s products are medical devices that are designed to permit the development and regrowth of human tissue. This transaction will be immediately accretive to Ligand and represents Ligand’s entry into the field of medical devices.

Ligand will receive a share of revenue from the currently marketed CorMatrix portfolio of vascular, cardiac and pericardial tissue repair products. In addition, Ligand will receive a share of revenue and potential milestones from the currently marketed CorMatrix CanGaroo ECM Envelope for cardiac implantable electronic devices. Ligand is owed a guaranteed minimum annual payment of $2.75 million. The currently marketed portfolio is expected to deliver approximately the annual minimum payments in the near term but has the potential to double over time based on the commercial success of the programs. Ligand will also potentially receive a mid-single digit royalty from CorMatrix’s development-stage Micronized ECM product and replacement valve products. CorMatrix’s existing and pipeline medical devices address market opportunities estimated to exceed $1 billion annually.

“This transaction further diversifies Ligand’s revenue and expands our portfolio to now include economic rights on unique and innovative medical devices that have already begun to prove their utility in the market today,” said John Higgins, CEO of Ligand. “The opportunity is an excellent fit for Ligand as it is financially accretive, does not require increased operating expenses and enables Ligand to begin to participate in the highly lucrative and growing medical device industry. We are very impressed with CorMatrix’s technology and operating team, and look forward to further development and expansion of their product line.”

The technology foundation for the underlying assets is Extracellular Matrix (ECM), an innovative implantable medical device that enables migration, vascularization and remodeling of pericardial, cardiac and vascular tissues, which remodels into the patient’s own native tissue with no foreign materials left behind. The programs are indicated or intended for use in a variety of cardiovascular procedures. The products are marketed and developed by CorMatrix Cardiovascular.

Ligand expects this transaction to add approximately $1 million for partial year revenue in 2016 and contribute approximately $0.04 of adjusted earnings per share in 2016. Ligand will not incur any expenses to develop or commercialize the underlying products. The amount Ligand will record as revenue will reflect deductions for deal amortization that will be recorded as an offset to revenue.

Greenhill & Co. LLC served as sole financial advisor to CorMatrix Cardiovascular.

CorMatrix Cardiovascular is a Roswell, Ga.-based privately held developer of biomaterial devices that harness the body’s innate ability to repair damaged cardiac and vascular tissue. CorMatrix ECM Technology allows surgeons to restore the native anatomy of cardiac and vascular tissue in need of repair, serving as a superior alternative to synthetic or cross-linked materials. CorMatrix is an innovative implantable medical device that enables migration, vascularization and remodeling of pericardial, cardiac and venous tissues. The patient’s native tissue is restored with no foreign materials left behind to cause scarring or adhesions.

La Jolla, Calif.-based Ligand is a biopharmaceutical company that discovers and develops medicines. It partners with other pharmaceutical companies to leverage what they do best (late-stage development, regulatory management and commercialization) to ultimately generate revenue. Ligand’s Captisol platform technology is a patent-protected, chemically modified cyclodextrin with a structure designed to optimize the solubility and stability of drugs. OmniAb is a patent-protected transgenic animal platform used in the discovery of fully human mono- and bispecific therapeutic antibodies. Ligand has established multiple alliances, licenses and other business relationships with the global pharmaceutical companies including Novartis, Amgen, Merck, Pfizer, Celgene, Gilead, Janssen, Baxter International and Eli Lilly.